Private equity ownership is changing the questions students should ask accounting firms

A student comparing two public accounting offers might ask about salary, busy-season hours, office culture and promotion prospects. They may compare audit with tax, or a large firm with a regional practice. But would they ask who owns the firm, how that ownership affects training, or whether the familiar route to equity partnership still exists?

Those questions are becoming harder to ignore as private equity investment spreads through US public accounting. Yet students may still be working with an older picture of the profession: a CPA-owned partnership in which junior staff learn through close supervision, progress through a relatively familiar hierarchy and may eventually buy into the firm.

A study in Issues in Accounting Education explores how private equity investment could alter that picture. Its evidence does not show what new recruits typically experience. Instead, it captures informed expectations from 15 senior stakeholders: seven current or former regulators, two professional association leaders and six partner-level practitioners. Interviews conducted in spring 2025 examined firm culture, career choice, skills development, professional judgment and compensation.

Participants were recruited through professional networks and snowball referrals, so the sample is not representative. Several interview questions also explicitly invited consideration of potential cost reductions and quality risks, including layoffs, reduced training, offshoring and fewer engagement hours. This may have directed attention towards adverse outcomes.

The participants anticipated substantial change, but private equity-backed firms are not a single category. Their structures, service strategies and employment arrangements vary. The study is therefore most useful as a prompt for better questions, not as a verdict on whether students should join or avoid a particular firm.

Ownership can shape the working environment

To understand the career implications, students first need a basic picture of an alternative practice structure. In the arrangement described by the study, a majority CPA-owned entity performs attest work, while a separate nonattest entity can have outside ownership. An administrative services agreement connects them. The nonattest entity may hold most employees and assets, then provide staff, technology and other services to the attest entity.

That legal division does not necessarily tell a graduate how work will feel from day to day. Six interviewees raised the possibility that outside owners could influence operational matters such as staffing, fees, compensation, and client acceptance or retention, despite the formal separation of the entities. The study reports these concerns but does not determine how prevalent such influence is or whether any particular structure complies with current independence requirements.

Culture was the most consistent theme. All 15 interviewees expected private equity investment to change firm culture, and 13 expressed concern that pressure for profitability could adversely affect culture and service quality. Two believed regulation and professional norms might offset negative effects.

These are predictions from a small senior stakeholder group, not measured outcomes across firms. They nevertheless expose a weakness in conventional careers advice. Labels such as “large firm”, “regional firm” and “non-Big 4” reveal less than they once did. Two firms of similar size may have different ownership horizons, decision processes, incentive systems and approaches to professional identity.

For educators, the practical response is not to replace one stereotype with another. Traditional partnerships are not automatically collaborative, developmental or free from commercial pressure. Nor are private equity-backed firms necessarily poor places to build a career. Ownership should instead become another variable students learn to investigate.

Ask what will replace the apprenticeship model

Early-career accountants have traditionally learned partly through repeated exposure to routine work, review comments and informal contact with experienced colleagues. This apprenticeship model can be inefficient, but it gives novices opportunities to see how technical rules, client circumstances and professional judgment interact.

Eight interviewees were concerned that profitability pressures could reduce investment in technical development or constrain professional judgment. The present study also discusses how standardization, offshoring and artificial intelligence may remove some routine work through which junior staff previously built their understanding. A separate accounting working paper by Carlson and colleagues reports that midlevel professionals in private equity-backed firms perceived increased offshoring, standardization and generative AI use as weakening apprenticeship and autonomy. That evidence concerns reported experiences rather than the expectations captured in the present interviews, but it remains a working paper and does not establish what entry-level staff typically experience. These developments are occurring throughout the profession, not only in firms with private equity investment, although the authors of the present study suggest that investor expectations may accelerate them in some settings.

Removing repetitive work is not inherently harmful. Technology may release staff from low-value processing and give firms more capacity to invest in sophisticated systems. The career question is what takes the place of the experience that has been removed.

A student hearing that a firm uses AI extensively or sends routine work offshore could ask:

• What work will I perform in my first year?
• How will I learn the processes underlying outputs that I am expected to review?
• How often will I receive feedback from experienced professionals?
• Who is responsible for mentoring and technical development?
• How does the firm assess professional judgment, rather than speed or utilization alone?
• What support does it provide for CPA qualification and continuing development?

These questions are relevant to prospective US public accounting employers. They become particularly useful when a firm promises rapid technological change without explaining its training model.

Educators can reinforce the same point in class. Give students a technology-generated output, but require them to identify the evidence needed to evaluate it, the assumptions that could fail and the circumstances requiring escalation. The study did not test this teaching approach, but it offers a realistic response to the professional conditions its participants anticipated. Students need experience reviewing work intelligently, especially if they may enter roles in which they are asked to assess processes they have rarely performed themselves.

Look beyond the headline salary

Starting salary is visible. The long-term economic structure of a career is much harder for a student to assess.

Seven interviewees discussed compensation changes associated with private equity investment. Their comments included fewer conventional equity partnership opportunities, stronger expectations for revenue generation and the use of equity-like incentives. One example was phantom stock, which can provide a cash benefit linked to changes in a firm's value without granting actual ownership or voting rights. Its eventual value depends on the plan and the firm's performance.

This creates possible opportunities as well as trade-offs. Some employees may gain access to performance-related rewards earlier than they would under a traditional partnership model. Students interested in consulting, business development or a growth-focused environment may find such arrangements attractive. Others may place greater value on a route to ownership in the accounting firm itself, technical specialization or a career concentrated in attest work.

The study does not establish typical starting salaries, incentive values or lifetime career returns. Advising should therefore move from comparing numbers to examining terms. Students can ask:

• Is there a route to ownership, and ownership of which entity?
• What distinguishes an equity partner from a nonequity partner or director?
• How are bonuses and equity-like awards calculated?
• What conditions must be met before an award has value?
• What happens to an award if the employee leaves or the business is sold?
• How much weight do sales, realization and practice growth carry in promotion decisions?

A simple offer-comparison exercise could ask students to evaluate two hypothetical firms across current pay, training, qualification support, promotion criteria, ownership prospects and incentive risk. The aim is not to calculate one universally correct choice. It is to show that a higher starting salary can coexist with a different package of future opportunities and expectations.

Service strategy belongs in the careers conversation

Ten interviewees predicted some streamlining of audit practices, especially in lower-margin areas such as governmental, nonprofit and small public company audits. Nine referred to a shift towards consulting or other higher-margin services. The study did not measure actual changes in firms' service portfolios, and its findings do not mean that private equity-backed firms generally plan to leave audit.

Even so, the direction of a firm's investment matters to a graduate. A student attracted to audit for its public-interest role may want to know whether the prospective employer intends to expand that practice, concentrate on selected niches or reduce particular categories of engagement. A student interested in advisory work may view an expanding consulting platform as an opportunity.

This makes service strategy a more useful topic than a generic question about available departments. Students might ask which services the firm expects to grow, how resources are allocated between attest and advisory work, and whether specialists can build long-term careers without becoming sales-focused managers.

The same issue can support a productive classroom discussion. Present students with a simplified alternative practice structure and ask them to identify where decisions about staffing, pricing, client selection, training and compensation might be made. Then ask how those decisions could affect professional judgment and public-interest responsibilities. The exercise should focus on incentives and governance questions rather than inviting students to pronounce on legal compliance without current authoritative guidance.

Turn a comparison table into an investigation

The paper provides a table contrasting traditional and private equity-backed firms across culture, staffing, services, training and compensation. It is tempting to hand students that table as a description of two settled models. That would give it more authority than the evidence supports.

The table combines the present study with other interview research, including working papers and comments not reproduced in the article. Several entries are framed broadly even though arrangements differ among firms. It is better used as a set of hypotheses to investigate.

Students could select an employer and examine public information, recruitment material and questions raised at careers events. Which entity employs the staff? How does the firm describe its ownership? What service lines is it acquiring or expanding? What evidence is available about training, promotion and professional qualification? Where is the information specific, and where does it rely on polished but vague claims?

This approach also helps students assess all employers more critically. A conventional partnership should not receive a free pass simply because its ownership model looks familiar. It should be able to explain its supervision, workload, promotion and reward systems too.

Private equity ownership is not a reliable shortcut to judging whether a firm is good or bad. It is a reason to stop treating ownership as invisible. The proposed update to careers teaching is to add ownership structure, governance, training arrangements, service strategy and long-term incentives to the questions students already ask. The study did not evaluate this approach with students; its aim is to help them understand what they are accepting.